Music Broadcast Ltd on Friday raised Rs 146.55 crore ($22 million) through the sale of shares via anchor allotment ahead of its three-day initial public offering (IPO) beginning Monday.
The radio unit of Blackstone-backed media house Jagran Prakashan Ltd, which operates Radio City, issued about 4.41 million shares to 17 institutional investors at Rs 333 per share, stock exchange filing showed.
Investors who bought the shares include funds of Morgan Stanley, BlackRock, Franklin India, Nomura and Pictet Mauritius.
Anchor investors are institutional investors who accept a one-month lock-in period for a sizeable allocation of shares and support a public offering. Their participation highlights investors’ confidence in an IPO and sets a benchmark for the investor community at large.
Among Indian asset managers, ICICI Prudential Asset Management Co, Reliance Capital Trustee Co Ltd and Birla Sun Life Asset Management Co also bought Music Broadcast shares. Birla Sun Life Insurance Co and HDFC Standard Life Insurance Co were also among the buyers.
The interest shown by anchor investors, gains importance as it will be the first radio operator to float an IPO in over a decade.
In November 2005, Times Group-controlled Entertainment Network (India) Ltd had gone public. The company commands a market valuation of about Rs 3,956 crore ($592 million), stock-exchange data show.
Several domestic financial services firms have recommended clients to subscribe to Music Broadcast’s maiden offering, citing long-term positive outlook for the radio industry in the media and entertainment (M&E) sector.
“Although the stock does not look all that promising on a relative valuation basis, our long-term outlook on the radio industry of the M&E space remains positive, which is likely to grow at 16.9% CAGR over 2015-20E. Considering its popular content, strong sales capability, the advantage of the existing JPL relationship with advertisers, and expansion into new geographies, we are upbeat on the IPO. Long-term investors seeking to add weight in the M&E sector should subscribe to the issue,” said IIFL Wealth & Asset Management’s research division in a client note on 3 March.
VCCircle had reported that Music Broadcast is seeking a valuation of nearly Rs 1,900 crore ($285 million) through the IPO. The company aims to raise about Rs 488 crore through a fresh issue of shares and a sale of shares by promoter group individuals Sameer Gupta and other members of his family.
The overall issue size will see sales of at 14.67 million shares, of which existing shareholders will off-load about 2.66 million. The issue will result in a dilution of a 25.71% stake on post-offer equity capital.
The company had received final observations from the Securities and Exchange Board of India on 9 February. The parent company had filed draft documents for an IPO of its radio unit on 1 December.
Jagran Prakashan had entered the radio segment with the acquisition of Music Broadcast Pvt Ltd in December 2014 from private equity firm India Value Fund Advisors and Star Group, which is part of the Rupert Murdoch-controlled 21st Century Fox. Murdoch also runs News Corp, the parent of this news website.
For more details on the IPO, click here.
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